Study blames large milk cooperatives for ousting small farms in NYS

Today’s marketplace for New York state dairy farmers to sell their milk is much narrower than it was 1980, experts say, dropping the premiums they received when there were more competitors here to do business with.

And according to a recent study, it’s a trend that has put all dairy farmers in a pinch.

Compiled by Food & Water Watch, a nonprofit organization based in Washington, D.C., the study contends that the consolidation of large milk cooperatives over the past three decades has been a contributing cause to the widespread drop in the number of farms in the state. But at the same time, individual farms have exploded both in size and number of cattle. The vast majority of dairy farmers in Jefferson, Lewis and St. Lawrence counties today are members of Dairylea of Syracuse or Agri-Mark, a regional cooperative based in Massachussetts.

St. Lawrence County is used as an example in the study to highlight the trend. Though the county continues to be among the state’s leaders in milk production, data show that it lost 77 percent of its dairy farms from 1982 to 2007, according to the U.S. Census Bureau, dropping from 1,115 to 262. By contrast, the size of the county’s farms greatly increased over the period: the average number of cows per farm jumped from 43 to 120, or 183 percent. The number of dairy cows fell by 34 percent, from 47,485 to 31,525.

Patty A. Lovera, assistant director of Food & Water Watch, said the demise in past decades of small farms in St. Lawrence County was driven partly by the expansion of milk cooperatives, which gave farmers fewer options to distribute their milk.

Cooperatives are marketing associations owned by member farmers that market their members’ milk to various processors.

“The cooperative system for picking up milk has been around a long time, and it’s supposed to be beneficial because they’re farmer owned,” Ms. Lovera said. “But what we’ve heard from a lot of farmers is these cooperatives have gotten bigger; we’re hearing they’re acting a lot like corporations, and they’re not getting fair prices for milk. A lot of people say they are members because they don’t have other options.”

But Bruce W. Krupke, vice president of the Northeast Dairy Foods Association, said the conclusion made by the study misrepresents what caused loss of farms over the past three decades. He said blaming the consolidation of milk cooperatives precludes three main causes of the trend. Consumer demand for fluid milk, for which farmers receive the most money, has gradually declined over the past three decades, making it harder for small farms to survive, while advancements in technology have spurred the expansion of dairy farms. He also blamed the U.S. Department of Agriculture federal milk market order system, which sets the price of milk using a formula that accounts for supply and demand in five states: the eastern two-thirds of New York, northeast Pennsylvania, New Jersey, Connecticut and Rhode Island.

“Dairy processors and manufacturers are insulated from the claims made by the study because it’s the USDA federal milk market order system that dairy farmers created, which mandates what prices farmers get for their milk,” he said. “How can farmers complain they’re not being paid enough by a system they created?”

He continued, “Board members from Dairylea cooperative could sit down, write a letter to the USDA and say, ‘We no longer want a federal order in the Northeast.’ They have enough demand with farmers to do it. Prices could then be fairly set with farmers and producers” in the region.

Philadelphia dairy farmer Michael B. Kiechle, president of the Jefferson County Farm Bureau, said that because today’s marketplace pressures dairy farmers to join large cooperatives, small farms have to be as efficient as possible to earn a living from year to year.

“In the 1970s, I could look for the best prices from manufacturers to sell milk and sell it to get the best premium,” he said. “There were several plants here that farmers could sell their milk directly to. But in the marketplace today, as a farmer, you don’t get those profit margins.”

Across the Northeast, the majority of milk from cattle is distributed by three entities: Dairylea, Dairy Farmers of America — the nation’s second largest cooperative — and dairy processor Dean Foods, the nation’s largest dairy processor with 129 plants in 39 states.

One key development that affected farmers in the north country was the formation of a joint milk-marketing venture in 1999 between Dairylea and DFA. Called Dairy Marketing Services LLC, the merger was designed to distribute milk more efficiently by providing marketing services for more than 6,000 farmers across the Northeast. Dean Foods, which bottles 70 percent of milk across the Northeast, receives its milk only from DFA and DMS.

The collaboration of these three milk giants made it increasingly challenging for independent cooperatives to compete, Ms. Lovera said.

New York state “now has fewer cooperatives and processors, and in both of those steps, it’s more of a bottleneck,” she said. For large cooperatives, “it doesn’t matter how many farms they work with; what matters is the volume of the product and if we’re producing more milk. St. Lawrence County is a good example because the production of milk and cows has gone up, but it’s done on a smaller number of farms.”

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